The rapid expansion of Barnes & Noble superstores came at a severe price
to the independents, and Len Riggio became identified as a kind of publishing
Antichrist, a scorn he seems almost to court. By the mid-1990s Riggio was
sitting masterfully atop the American publishing industry. His 25 percent
interest in Barnes & Noble Inc. and his 90 percent ownership of Barnes
& Noble College Bookstores, a separate company with locations on 300-plus
college campuses, are reportedly worth in excess of $1 billion. (See
"The Textbook Case,"
page 138.) He lives the life of modern mogul, with an apartment
on Park Avenue, an expansive summer home
in Bridgehampton, Long Island, an art collection, and, in the basement
of Barnes & Noble's headquarters, a palatial wine cellar.

Despite his millions, Riggio maintains, "I've always been a little guy."
But from his lofty vista, he couldn't see the shifting landscape below,
or the little company that, in 1995, was on the verge of causing a huge
upheaval in the bookselling business.

Amazon.com seemed to go against everything that worked so well for Barnes
& Noble. Consumers, Riggio had shown, wanted to shop at "destinations"
- large, comfortable places that felt like public squares. Ecommerce, by
contrast, was about the absence of destinations. There were no books to
flip through, no shelf-side serendipities, no cute girls or guys to ogle,
no cappuccinos!

Riggio was used to the "hand-to-hand combat" of local battles, says Jay
Farmer,
an associate partner at Andersen Consulting who advises retailers on how
to cope with the Web. Instant competition in every neighborhood in America,
on the other hand, was more "like thermonuclear war - one bomb can take
the whole game."

Len's younger brother Steve knew a little bit about the Internet: He had
been a Delphi user for several years. And Steve Riggio, who had been working
as a generalist and deputy to Len at Barnes & Noble and who often butted
heads with his micromanaging brother, was ready to run his own show.

Steve Riggio had an epiphany: "It's better to cannibalize yourself than to be cannibalized."

Steve and Len Riggio couldn't be more different. While Len lives a high-profile
lifestyle, Steve resides quietly in the New Jersey countryside and spends
most of his spare time with his children. Where Len is a boisterous extrovert,
Steve is taciturn and averse to confrontation. "Len is the tough one and
he's an incredible negotiator," says designer Tibor Kalman, a family friend
and former store consultant. "Steve is more intellectual and reads a lot
of books."

In early 1996, nearly a year after Amazon was actually ringing up sales,
Steve convinced Len that they should look into the Web. He assembled some
of Barnes & Noble's younger, tech-oriented employees and got to work. But
at first, Steve didn't think the Internet would be anything more than an
innovative marketing tool for Barnes & Noble's brick-and-mortar stores.
That complacency was reflected in his project's management. The staff met
infrequently, and Daniel Palmer, one of the first to sign up for the new
venture, remembers "people pasting stuff on a wall and talking about
'community' and 'online loyalty.' I kept saying, 'Where's the computer?'"

While the online staff was engaging in high-minded colloquia, Amazon.com
was selling books. Moreover, Amazon was doing electronically what Len Riggio
had done in his superstores: making a vast and potentially alienating landscape
feel comfortable. Jeff Bezos's Seattle start-up scanned book covers and
posted them on the site, and encouraged customers to post their own reviews,
creating the feel of a vibrant fellowship of readers.

The Riggios soon confronted the true dilemma: They needed to sell books
online, but an online business could potentially cannibalize the margins
of the company's offline core. Those stores were located in prime real
estate, and they depended on high volume to turn a profit. Ultimately,
Steve had an epiphany that one barnesandnoble.com employee put this way:
"It's better to cannibalize yourself than to be cannibalized."

To hear Steve tell it, Len quickly endorsed his ecommerce plan. "From Day
One," Steve says, "he was on board not just with the vision thing but with
the company mandate that the venture had to be funded." The brothers were
energized. They had no doubt that once they went online, they'd crush the
rubes at Amazon. "There was a definite idea that strategically we could
defeat Amazon because of our distribution, and, with the deep pockets of
Barnes & Noble, that we could outlast them and outdiscount them," says
one barnesandnoble.com employee.